The Analytical Overview of the Main Currency Pairs on 2022.08.31

The EUR/USD currency pair

• Prev Open: 0.9998
• Prev Close: 1.0015
• % chg. over the last day: +0.17%

Germany’s inflation climbed to an annual rate of 7.9% in August, returning to its all-time high of May, its highest level in almost 50 years. There are increasing signs from ECB officials that the Central Bank must aggressively hike rates at its next meeting. At the same time, there is a growing possibility that the US Federal Reserve will also raise rates by 0.75% at its next meeting. Traders raised their rates for the third consecutive 75 basis point increase in September to 76.5% from 70% following the release of US jobs data which showed that the US labor market remains strong.

• Support levels: 0.9951
• Resistance levels: 1.0032, 1.0112, 1.0146, 1.0230, 1.0286, 1.0365

From the technical point of view, the trend on the EUR/USD currency pair on the hourly time frame is bearish. The price is trading between the moving averages, which makes it difficult to find good entry points. The MACD indicator is in the positive zone, but buyer pressure is weak. Under such market conditions, buy trades are best sought on intraday time frames from the support level of 0.9951, but with confirmation. Sell trades can be considered from resistance levels of 1.0032, but only after the additional confirmation.

Alternative scenario: if the price breaks out of the 1.0146 resistance level and fixes above, the uptrend will likely resume.

• – French Consumer Price Index (m/m) at 09:45 (GMT+3);
• – French GDP (q/q) at 09:45 (GMT+3);
• – German Unemployment Rate (m/m) at 10:55 (GMT+3);
• – Italian Consumer Price Index (m/m) at 12:00 (GMT+3);
• – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+3);
• – US FOMC Member Mester Speaks at 15:00 (GMT+3);
• – US ADP Non-Farm Employment Change (m/m) at 15:15 (GMT+3);
• – US Chicago PMI (m/m) at 16:45 (GMT+3).

The GBP/USD currency pair

• Prev Open: 1.1704
• Prev Close: 1.1653
• % chg. over the last day: -0.44%

The CBI’s business optimism balance, which measures the difference between the share of optimistic and pessimistic firms, has fallen to its lowest level since May 2020 for both consumer and business services. The energy crisis and rising inflation are hurting households and every business sector. At this point, all economic and fundamental factors point to weakness in the British economy, which is negatively affecting the national exchange rate.

• Support levels: 1.1659, 1.1561
• Resistance levels: 1.1715, 1.1814, 1.1838, 1.1901, 1.1994, 1.2035, 1.2167

From the technical point of view, the trend on the GBP/USD currency pair on the hourly time frame is bearish. The British pound continues to lose ground. The price is trading below the moving levels, and the MACD indicator is in the negative zone, but there are the first signs of divergence. At the moment, it is better to look for sell trades from the resistance level of 1.1814, but only after the additional confirmation. Buy trades can be considered on intraday time frames from the support level of 1.1659 or 1.1561 if the price drops lower.

Alternative scenario: if the price breaks out through the 1.1901 resistance level and fixes above, the uptrend will likely resume.

The USD/JPY currency pair

• Prev Open: 138.74
• Prev Close: 138.79
• % chg. over the last day: +0.04%

The Japanese yen is under pressure from a soft monetary policy from Japan’s Central Bank. And as the US Fed continues to raise interest rates aggressively. The rate differential is widening, so the USD/JPY is inclined to rise fundamentally. Official data released Wednesday showed that industrial production in Japan increased by 1.0% in July from the previous month. Retail sales rose for the fifth straight month, raising hopes that the world’s third-largest economy will benefit from the strength in consumer spending this quarter.

• Support levels: 138.53, 137.67, 136.85, 135.89, 135.35, 134.23, 133.47, 132.27
• Resistance levels: 139.40

From the technical point of view, the medium-term trend on the currency pair USD/JPY is bullish. The price is trading above the moving average lines again, and the buyers’ pressure is increasing. The MACD indicator remains positive, with no signs of reversal. Under such market conditions, buy trades can be sought from the support level of 138.53 or 137.67, but with additional confirmation. For sell deals, it is possible to consider a resistance level of 139.40, but only with additional confirmation, as fundamentally, USD/JPY quotes are inclined to grow.

Alternative scenario: If the price fixes below 136.85, the downtrend will likely resume.

• – Japan Industrial Production (m/m) at 02:50 (GMT+3);
• – Japan Retail Sales (m/m) at 02:50 (GMT+3).

The USD/CAD currency pair

• Prev Open: 1.3004
• Prev Close: 1.3089
• % chg. over the last day: +0.65%

The Canadian dollar is a commodity currency, so it depends not only on the monetary policy of the Canadian Central Bank but also on the oil price. Oil decreased by $6 yesterday amid rumors that Iran and the US have reached an agreement on the nuclear deal, allowing Iran to export oil to the world markets again. The drop in oil had a negative effect on the Canadian currency.

• Support levels: 1.3026, 1.2992, 1.2958, 1.2940, 1.2900, 1.2858, 1.2809, 1.2761
• Resistance levels: 1.3105

From the point of view of technical analysis, the trend on the USD/CAD currency pair is bullish. The price is now trading near the moving averages. The MACD indicator is in the positive zone, but there are signs of divergence. Under such market conditions, buy trades should be considered on the lower time frames from the support level of 1.3027 or 1.2992, but only with confirmation. For sell deals, it is best to consider the resistance level of 1.3105, but only with short targets.

Alternative scenario: if the price breaks down and consolidates below the 1.2900 support level, the downtrend will likely resume.

• – Canada GDP (q/q) at 15:30 (GMT+3);
• – US Crude Oil Reserves (w/w) at 17:30 (GMT+3).